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Oregon Housing and Community Services

Flex Lending: FirstHome Guideline Manual: Eligibility

Section 2: Borrower Eligibility

2.1 Eligible Borrower

A borrower is eligible to receive a mortgage loan under the program if, on the dates of application and closing, the following requirements are met:

  1. Income Limitation: The annual gross income of all household members and family members age 18 and older must not exceed the income limits established by the department pursuant to Section 143 of the Code of 1986, as amended, and published annually by the U.S. Department of Housing and Urban Development (HUD). (See Section 2.5). 
  2. Residency: The borrower must be a resident or intend to become a resident of Oregon. Follow agency guidance for U.S. citizenship requirements. 
  3. Occupancy: The residence financed by the mortgage loan must be occupied as a principal residence within 60 days of loan closing. 
  4. Existing Mortgage Loans: The borrower must not be acquiring or replacing any existing mortgage loan on the property, with certain exceptions (e.g., construction loans, bridge loans, or qualified rehabilitation loans). 
  5. Legal Capacity: The borrower must possess the legal capacity to incur the obligations of the mortgage loan. 
  6. Credit: The borrower must have a credit standing acceptable to the department. 
  7. First-time Homebuyer Requirement: The borrower must not have held a present ownership interest in any principal residence during the three-year period preceding the program mortgage loan was executed, with certain exceptions. (See Section 2.2). Flex Lending: FirstHome 7 
  8. Compliance: The borrower must meet the requirements established by Section 143 of the Internal Revenue Code of 1986 and described in OAR 813-020-0070.

2.2 First-time Homeowner Requirement

Previous Ownership

Borrowers may not have had a present ownership interest in a principal residence at any time during the three-year period immediately preceding the closing date of obtaining the mortgage loan.

All borrowers purchasing a property in a non-targeted area must be a first-time homebuyer (see Section 2.1). To verify compliance with IRS Code, the most recent three-year federal tax return immediately preceding the program closing date must be provided to the department.

Exceptions to the First-Time Homebuyer Requirement

  1. Targeted Area Exemption: If the subject property being purchased is in a targeted area the homebuyer is not required to be a first-time homebuyer. To verify compliance with IRS Code the most recent federal tax return immediately preceding the program closing date must be provided to the department. 
  2. Veteran’s Exemption: Borrowers who have served in active duty and were honorably discharged and have not previously used a mortgage revenue bond program are exempt from the first-time homebuyer requirement. All other requirements remain. Completed veteran exemption form SFMP 7- VA must be included with the application. To verify compliance with IRS Code, the most recent one-year federal tax return immediately preceding the program closing date must be provided to the department. 
  3. Borrowers who have ownership in: 
    • Bare land 
    • A manufactured home in a park on leased land (must be sold prior to closing date)

Please note: Borrowers may not own any additional property at closing.

2.3 Homebuyer Education

Homebuyer education is required for all first-time homebuyers. Homebuyers must complete homebuyer education through an OHCS homeownership center or other approved OHCS resource. 

In the event homebuyer education cannot be completed with an OHCS homeownership center, homebuyer education may be completed using online courses with Finally Home! or Framework Homebuyer Education by Neighborworks.

  • Approved lender must retain a copy of the certificate of course or counseling completion in the loan file.
  • Certificate of course or counseling completion certificate is good for one year from the date of completion.

2.4 Occupancy

Principal Residence Requirement

The borrower must occupy the residence as their principal residence within 60 days of the mortgage loan closing. The residence must be used by the borrower exclusively as a single-family residence. At no time may the borrower:

  • Use the residence as an investment property. 
  • Use the residence as a vacation or recreational home.

Year-Round Occupancy

Properties must be accessible year-round regardless of location. Mortgage loans for inaccessible properties are ineligible for purchase by the department.

Ineligible Occupancy Types

The following types of residences are not eligible for any mortgage loan products offered in the program: 

  • Homes intended for use as investment properties
  • Recreational, vacation, or second homes

Usage of Residence in a Trade or Business

A home with more than 15% of the total area used primarily in a trade or business does not qualify as a principal residence.

2.5 Income Limits

The Annual Gross Household Income (AGHI) of all household members and family members age 18 and over must not exceed the income limits established by the department pursuant to Section 143 of the Code of 1986, as amended, and published annually by the U.S. Department of Housing and Urban Development (HUD). Refer to U.S. Code of Federal Regulations 24 CFR Section 5.609 – Annual income and Section 143(f) of the Code, as amended.

Responsibilities of Approved Lenders

Approved lenders must ensure that the income meets the AGHI guidelines and requirements. Loans that exceed AGHI limits are ineligible to be purchased by the department.

2.6 Penalties for Misstatement

Any individual who makes a material misstatement in any affidavit or certification related to the mortgage loan application may face liability under applicable civil or criminal law. This applies if the misstatement is due to either negligence or fraud on the part of that individual.

2.7 Ownership Interest and Title

Ownership must be vested solely in the name of the eligible borrower. Ownership may not be held in trust or through a limited liability company (LLC).

Non-Borrowing Spouse (NBS) Title Requirements

A non-borrowing spouse (NBS) may be added to the title, provided the following requirements are met: 

  • A title report with a clear lien and judgment search. 
  • Evidence that the NBS does not currently own any other residential property. 
  • Evidence that the NBS has not owned a primary residence within the past three years.

2.8 Co-Signers and Non-Occupying Co-Borrowers

Cosigners and non-occupant coborrowers are not permitted.